2022 Outlook for Energy

Today, the processes for making basic goods and infrastructure including steel, cement, aluminum, glass and chemicals require a lot of energy. They also generate emissions that are harder to reduce. These emissions decline through 2050 as industries use more electricity, natural gas, hydrogen, and carbon capture and storage.

Energy demand for personal transportation peaks and then declines before 2030 as fuel efficiency improves and people buy more electric vehicles. However, commercial transportation uses more energy as rising economic activity increases demand for goods and infrastructure.

The United Nations Intergovernmental Panel on Climate Change’s (IPCC) Lower 2°C scenarios and the International Energy Agency’s (IEA) Net Zero Emissions by 2050 scenario provide potential pathways for society to achieve the Paris Agreement goals. They highlight the importance of innovation to improve the cost and performance of lower-carbon alternatives, especially for commercial transportation and industry. As some of these technologies are still in early stages, clear and consistent government policies will be crucial to support deployment.

Having a numerous lower-carbon technologies will be critical in the energy transition, with multiple options required to meet differing needs. In aviation, biofuels are expected to be the primary transition fuel. Hydrogen-based ammonia is likely to capture some of the marine transportation market. Low-carbon blue hydrogen – made with carbon capture – will be key in replacing traditional furnace fuel to eliminate carbon from the industrial sector.

The IPCC and IEA scenarios show that no single energy source or technology solution is sufficient to achieve a Lower 2°C pathway. While lower-emission sources play important roles, oil and natural gas remain a significant part of the energy mix for decades, reinforcing the need for continued investment.